Financial Statement Fraud Investigations Essay Example | Topics and Well Written Essays - 1000 words

financial Statement Fraud Investigations - Essay ExampleThe inventories were shared amid the various stores of the company to hike up sales. Various external vendors were arranged to ship merchandises of the company claiming fake discounts. Loads of merchandises were sold to wholesalers and then the receipts were spread to individual stores of the company. This illegal m atomic number 53y was entered and circulated between the Antar family and was parked into undisclosed foreign bank accounts. The initial reports suggest that when Crazy Eddie went public about twenty years ago, its shares were traded at $8. The companys shares charter inflated 10 times during the years due to manipulation of accounts. By showing fake sales, misrepresented inventories, doctoring and window dressing financial teachings, the company was able-bodied to hide its true picture of financial position from the public. Thus, the companys stocks looked more attractive from outside than it actually was. The sales of the company never shake off since the merchandises circulated between the various stores and was treated as revenues. Such fraudulent practices helped Crazy Eddie to maintain a healthy double-digit growth and consequently inflated the companys share prices. ... Due to this, the creditors got the impression that the companys demand was unmatched and hence they extended the credit period. The payments of actual sales were made in installments. apiece installment of a particular sale was treated as individual sales. The sharing of inventories between some forty stores helped the company conceal true facts. The telescope of Examination Financial statement frauds challenges the integrity and corporate social responsibility of companies. These frauds may be malpractices in the form of intentional misrepresentation, alteration of financial reports, falsification, doctoring vocation documents and business transactions, deliberate window dressing and misapplication of accountin g policies, inflating sales and inventories, bribes, fictitious revenues, over or understatements in financial statements, and so on. The financial statement fraud examination aims to implement integrity and CSR in all companies by encouraging transparent, reliable, and investor-friendly financial statement. Financial statement examination justifies the concept of audits and establishes the confidence of parliamentary law as well as all market participants. It tries to make the capital market more efficient by providing perfect information for all participants. Financial scandals not only ruin the repute of the company, it might also create negative sentiments in capital markets, affects the nations economic growth and prosperity. It gives the culprits one more chance to plead guilty and rectify accounting practices and malpractices. Fraud examination can help protect the companys minority shareholders from potential bankruptcy or substantial economic loses.